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#157214 - 09/12/05 08:19 PM Labor Expense
Tiger Offline
Member

Registered: 05/04/05
Posts: 714
Loc: Crystal Lake, IL USA
Someone recently commented that labor is our greatest expense. I'm curious what you do to reduce that expense (other than the obvious...reducing our pay for the One Man Shows).

In fast food restaurants and day care businesses they watch this very closely. People are called in and sent home on an hourly basis as business rises and falls through the day.

This doesn't seem like a good idea for the trades, but I think the common practices around here are the use of apprentices and undocumented laborers.

Setting up a job well and planning can help also. There's nothing like having the truck 10' from the work.

Dave

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Business, Office, Estimating, Legal:
#157215 - 09/12/05 09:38 PM Re: Labor Expense
LK Offline

Member

Registered: 01/21/03
Posts: 1721
Loc: New Jersey
"Someone recently commented that labor is our greatest expense"
_____________________________________________

Labor is my least expense, it's the overhead that is the big nut.

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#157216 - 09/13/05 01:53 PM Re: Labor Expense
Tiger Offline
Member

Registered: 05/04/05
Posts: 714
Loc: Crystal Lake, IL USA
Overhead as a total may be, Les, but if you made a pie chart of individual expenses with the total as your breakeven, wouldn't labor (or payroll including taxes, Workman's Comp. and benefits) be your largest expense?

Dave

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#157217 - 09/13/05 06:53 PM Re: Labor Expense
Electric Eagle Offline
Member

Registered: 04/20/02
Posts: 928
Loc: Alpharetta, GA
Overhead as a whole is our biggest expense. If you want to look at line by line, labor would be second to materials. We watch material waste and costs very closely. We try to keep to trucks stocked and jobs planned well to prevent wasted labor due to wrong or missing materials.

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#157218 - 09/15/05 04:18 PM Re: Labor Expense
Tiger Offline
Member

Registered: 05/04/05
Posts: 714
Loc: Crystal Lake, IL USA
The ratio of labor to materials depends on what you're installing, I'd think. I do a lot of remodeling type wiring---fishing in walls for extra outlets, or running pipe. The materials are usually much less than the labor. If you're installing expensive fixtures, the materials will be more.

Dave

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#157219 - 09/16/05 12:34 PM Re: Labor Expense
LK Offline

Member

Registered: 01/21/03
Posts: 1721
Loc: New Jersey
Material, is not even in the picture, material is listed as cost of goods when purchased, and then recovered when sold or installed, not even on the chart, with the exception of mark-up that would reflect additional profit.

As Eagle noted:" try to keep the trucks stocked and jobs planned well to prevent wasted labor due to wrong or missing materials.

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#157220 - 09/23/05 02:55 PM Re: Labor Expense
Tesla Offline
Member

Registered: 06/16/04
Posts: 1280
Loc: Sacramento, CA
Labor effectiveness is the big 'controllable cost’ that must be addressed each job. It is achieved by clever line management. It’s what makes or breaks many bids.

Most overhead requires top management intervention and painful trade offs – if it can be cut at all.

Bid precision is the biggest ‘controllable’. It is what makes or breaks many contractors.

Outstanding contractors master all of the above.
_________________________
Tesla

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